The run up to the B-day was marked by high drama speculating whether he will be populist or reformist? The man of the moment has chosen to be neither.
The man who presented his eighth budget on Thursday afternoon was expected by his foes and friends alike to put out the best at his command to re-write the India story. But alas it was not be!
Having come into bat in the slog over in a keenly watched tie, P Chidambaram was to wield the long handle given this was the only option available.
But he chose instead to leave the ball, watching it until the last minute. Well left, except that, this was a 20-20 tie and not a test match.
Oh, yes, the man who gave India the dream budget and was expected to better his own performance this time is now safely ensconced in his crease.
But thereby hangs a tale!
Did the finance minister stick to the brief: make the right noises, proclaim intent is sincere but steer clear of some big hits? In short, play safe, this is election year!
Chidambaram unlearnt his own lessons of 2008 when he became the Santa to waive off the loan. The Sensex red flagged him then as today but he did take some credit for the return of the UPA to power.
As expected the Prime Minister has commended the budget saying achieving 8 per cent growth is a prerequisite but it would not happen in a year. Yes, what was left unsaid was that it did not take a century to climb off the 8 per cent growth to touch a low of 5 to 5.5 per cent this fiscal. The slide began 2008 end itself.
They say his hands were tied but then Chidambaram is no pushover. Now look at the tokenism that came across as the key sentiment this budget. India’s first all women public sector bank, gold duty limit raised to Rupees one lakh for women, Rs 1000 crore a piece for women safety and skill development for estimated 55 crore Indian youth (too much for leveraging the demographic dividend prescribed by the economic survey).
Yes, Nirbhaya, is the voice of middle class anger, hence with women as the target group, a Nirbhaya fund too got announced.
Be safe hence do not revise tax slabs but be wedded to tokenism. A 2000 rupees credit for 2 to 5 lakh income slab assesses who file returns while the majority tax payers are left high and dry to manage on their own the inflation index.
Chidambaram did not want to be seen as being pro rich or pro corporate: it would hurt the ‘aam admi’ image of his party. But penalizing about 43,000 one crore plus income assesses for they declare their income while many others just evade any tax but earn much higher defies logic.
Count the luxury cars sold in last one year or premium houses bought and sold and you have only yet touched the tip of the iceberg when it comes to identifying the real big ticket tax evaders. Tax the luxury goods with high end cars in focus and you are safely ‘seen’ in the company of the ‘aam admi’.
SUVs are diesel guzzlers (it is another matter that diesel as an auto fuel is a fraction of the other industry uses). But target it must be: hence you have to pay more for it but not if you are smart enough to convert it into a taxi!
Is mobile phone a luxury? That too at Rs 2,000 plus: Chidambaram thinks so. Did not we push for digital penetration with India billed to be among the biggest smart phones markets in the world? But then in the give and take balance sheet, housing loan interest waiver is increased to Rupees 2.5 lakh on a loan of 25 lakh.
Mind you if have bought a house for Rs 50 lakh and above, you would have to pay now 1 per cent transaction tax. Inflation mitigation got a novel solution this budget: do not eat out, especially in summer. For any spend in an AC restaurant is going to result in a levy.
Yes, it is safe, and perhaps will fetch some middle class votes too: ATMs across India sponsored by PSU banks (if only they run) is indeed a good move. MSME sector benefit continuation for three years covering micro firms as they grow would induce growth in this vital sector.
But where are the big hits? How does one actually arrest the declining growth? Fears abound that if India does not grow continually at minimum 8 per cent there is going to be danger to the basic equilibrium that keeps India united? What is the roadmap for bringing current account deficit to begin with below 5 per cent level to about 3 per cent? As of September 2012, India’s external debt was 25 per cent higher than country’s total foreign exchange reserves.
Clarity on definitions is welcome. But what about reversing the threat of hot money giving us company today suddenly abandoning us for greener pastures? Foreign Institutional Investors (FIIs) love the equity market but how does one get them interested in the debt market. Where is the roadmap for boosting exports?
Tomorrow could indeed be another day! Yes, if only today is taken care of!
(The writer is Editor-Zee Research Group)